From the December 1997 SURVEY OF
CURRENT BUSINESS

Preview of Revised NIPA Estimates for 1992 From the 1992 I-O Accounts

By Leon W Taub and Robert P. Parker

This article presents preliminary revised estimates of the major aggregates
and components of the national income and product accounts (NIPA's) for 1992.
The revised estimates reflect the newly available benchmark input-output
(I-O) accounts for 1992, which are presented in the November 1997 issue and
in this issue of the SURVEY OF CURRENT
BUSINESS./1/ As part of the next comprehensive
revision of the NIPA's, the estimates will be further revised and will
incorporate definitional changes and other statistical improvements.

The first part of this article provides a brief overview of the revision;
the second part describes the new source data and estimating procedures
incorporated into the revised estimates; and the third part identifies some
of the other changes that will be introduced in the NIPA comprehensive revision.

Preliminary revisions to NIPA major aggregates and components

The presently published and preliminary revised estimates for 1992, and the
amount of the revision, are shown for the five NIPA summary accounts in
table A. The revised estimates of gross domestic
product (GDP) and its expenditure components are based on the 1992 I-O accounts;
the revised estimates of other NIPA major aggregates and components reflect
the incorporation of the I-O source data and expenditure estimates that directly
affect their calculation.

The revised estimate of GDP is $10.5 billion lower, or 0.2 percent lower,
than the presently published estimate for 1992. Personal consumption expenditures
(PCE) more than accounts for the downward revision. PCE for durable goods
was revised down $17.7 billion. Motor vehicles and parts was revised down
$6.6 billion, primarily reflecting reduced dealer margins; furniture and
household equipment was revised down $10.7 billion. PCE for nondurable goods
was revised down $0.9 billion. Categories of nondurable goods that were revised
down include "other" nondurable goods ($4.1 billion), clothing and shoes
($3.7 billion), and gasoline and oil ($1.7 billion). These downward revisions
were partly offset by an upward revision to PCE for food ($7.4 billion) that
reflects an improved allocation of purchased meals and beverages at certain
retail and service establishments between consumption by persons (which are
included in final expenditures) and purchases by business (which are intermediate
purchases and are therefore not included in final expenditures) and that
reflects improved estimates of the misreporting adjustments for eating and
drinking places. PCE for services was revised up $7.6 billion. Upward revisions
to "other" services ($8.4 billion) and medical care ($6.3 billion) more than
offset downward revisions to housing ($4.2 billion) and transportation ($3.0
billion).

Gross private domestic investment was revised up $6.0 billion, reflecting
upward revisions to nonresidential producers' durable equipment (PDE) and
to structures. PDE was revised up $4.4 billion; the revision was more than
accounted for by industrial equipment and information processing and related
equipment. Within information processing and related equipment, business
purchases of instruments was revised up sharply, primarily as a result of
a reclassification of analytical instruments from photocopy and related
equipment; most other categories of information processing and related equipment
were revised down. Nonresidential structures was revised up $3.0 billion,
primarily as a result of upward revisions to electric light and power structures.

Government consumption expenditures and gross investment was revised down
$6.0 billion. State and local spending was revised down $3.9 billion as a
result of the incorporation of new data from the 1992 Census of Governments.
Federal spending was revised down $2.1 billion; both defense and nondefense
spending were revised down. As shown in account 5, line 12, the government
current deficit on a NIPA basis was revised down only $1.7 billion, because
the downward revision to State and local spending and a small portion of
the downward revision to Federal spending were to investment rather than
to current expenditures; in addition, government transfer payments to the
rest of the world was revised up $0.3 billion./2/

Net exports of goods and services was revised up $0.5 billion; a downward
revision of $2.0 billion to exports was more than offset by a downward revision
of $2.5 billion to imports. The preliminary revised estimates of exports
and imports shown in account 1 are on a NIPA basis; NIPA exports and imports
include, and the I-O accounts exclude, the value of U.S. goods that are returned
to the United States from other countries, foreign goods that are reexported
from the United States to other countries, and certain transactions between
foreigners that involve U.S. intermediaries. These differences do not cause
differences between the NIPA and I-O estimates of net exports.

The revised estimate of gross national income is $10.4 billion lower, or
0.2 percent lower, than the presently published estimate. Downward revisions
to rental income of persons ($6.2 billion) and to net interest ($5.0 billion)
more than account for the revision. Gross domestic income, which differs
from gross national income by net receipts of factor income, was revised
down $11.5 billion.

In the presently published estimates for 1992, GDP is $44.8 billion larger
than gross domestic income, and the statistical discrepancythe difference
between themis positive. Reflecting the larger downward revision to
gross domestic income than to GDP, the statistical discrepancy was revised
up slightly, to $45.8 billion, or to 0.7 percent of GDP.

Personal income was revised down $11.1 billion, or 0.2 percent, largely
reflecting the downward revisions to rental income of persons and to net
interest (account 2). Disposable personal incomepersonal income less
personal tax and nontax paymentswas also revised down $11.1 billion,
as taxes were not revised. As a result of the larger downward revision to
disposable personal income than to personal outlays, personal saving was
revised down $2.6 billion, and the personal saving ratepersonal saving
as a percentage of disposable personal incomewas revised from 6.2 percent
to 6.1 percent.

New source data and estimating procedures

A variety of new source data and estimating procedures were incorporated
into the 1992 benchmark I-O accounts. The I-O estimates incorporated detailed
data that had not been available to be incorporated into the NIPA's, including
data on industries that were covered for the first time in economic
censusesfinance, insurance, and real estate industries and transportation,
communication, and utility industries. The I-O accounts also incorporated
data on sales by detailed commodity from the 1992 economic censuses and trade
margins from 1992 annual surveys of merchant wholesalers and retail trade.

In addition, the detailed commodity-flow method was used to prepare the estimates
of PCE and PDE in the I-O accounts./3/ This method enables
the use of more of the detailed data from the economic censuses, of improved
estimates of the sales of businesses with no employees in mining, manufacturing,
and wholesale trade, which are excluded from the economic censuses, and of
improved adjustments on the extent of underreporting of sales on tax returns
used for the economic censuses./4/ Other newly incorporated
source data include Credit Union National Association data and additional
Federal Deposit Insurance Corporation data on bank revenues, which resulted
in revisions to the estimates of imputed interest.

The major source of the I-O estimates of foreign transactions is the U.S.
balance of payments accounts (BPA's). The I-O accounts reflect the 1992 estimates
released in the 1996 annual BPA revision; the estimates from the 1997 revision
became available too late to be incorporated. During the next comprehensive
NIPA revision, the estimates for 1992 and earlier years will be revised on
the basis of the BPA estimates available at that time.

Additional NIPA changes

In the next comprehensive NIPA revision, BEA will incorporate the results
of the 1992 I-O accounts as well as definitional and other statistical changes.
As part of its Strategic Plan, BEA is conducting research in many areas,
such as the treatment of purchases of software as
investment./5/ In addition, BEA is exploring the accuracy
of the present adjustments that are used to restate business incomes and
depreciation that are reported on business income tax returns in order to
conform them to the NIPA definition of investment./6/
BEA is also evaluating a recent Census Bureau report on a potentially large
understatement of the reported value of exports. To the extent that some
of this research is completed before the comprehensive NIPA revision, the
results may be incorporated into the extrapolators used in a regular annual
NIPA revision.